Wages Stuck in Slow Lane on Chile's Growth Speedway

• by Marianela Jarroud (santiago)
• Friday, February 10, 2012
• Inter Press Service

Economy Minister Pablo Longueira declared that the creation of 600,000 new jobs had contributed to bring down unemployment by 6.6 percent of the economically active population in the last rolling quarter of 2011, based on data gathered by the National Statistics Institute (INE).

'This is evidence of the results achieved by a government that knows that the road to full employment is through more growth,' Longueira said, in reference to the Central Bank's announcement that the economy had expanded 6.3 percent in 2011, in this country of almost 17 million people.

But economist Hugo Fazio disagrees with the right-wing government of Sebastián Piñera and refutes its proclaimed blind faith in economic growth.

'Chile is very far from full employment,' he told IPS.

Fazio said that the positive figures for unemployment and GDP growth are explained by the reconstruction works conducted after the February 2010 earthquake and tsunami, and by the 'extremely' high price of copper, currently at more than four dollars a pound (453.6 grammes).

'Last year was a year of rebuilding, and anywhere in the world that means a reduction in unemployment and a rise in employment. After destruction comes a necessary period of recovery, and that requires people working,' he said.

But 'what Chile has is structural unemployment, with a high rate of inactivity,' Fazio, who heads the non-governmental National Alternative Development Studies Centre, explained.

That is a reality that Ignacio Acevedo - a young forestry engineer with two daughters - knows only too well, as he has not had a job since he graduated four years ago.

Acevedo does not believe the official unemployment statistics and he is even more sceptical about the high number of jobs created according to the government. For the past four years, he has been sending his résumé to companies, knocking on doors and contacting acquaintances in an effort to secure an employment contract, but to no avail.

'I have a degree in forestry engineering from the University of Chile. When I graduated I realised that (in my field) there were no formal positions, (only) informal, minor, sporadic assignments, irregular in length and poorly paid,' he told IPS.

In his opinion, the market has changed little since he completed his studies. He is still finding work in fixed-term projects alone, providing specific services connected with his profession 'for a fee,' under informal conditions.

His job insecurity also affects his income, as he makes barely enough to live on.

The family's budget, already strained by huge debts, was further reduced when his wife was dismissed from her civil service job shortly after Piñera took office in March 2010.

'Hers is also a typical case of what young professionals, eager to work and contribute to our country, face. Despite having the highest qualifications and no involvement in politics, she was let go along with another 5,000 civil servants when the government changed,' Acevedo said.

'This led to frustration, depression and problems in our marriage, which ultimately resulted in our separation. The impact (of being unemployed) is devastating,' he said.

In a country where engineering is one of the highest paid professions, Acevedo has to work around the clock to bring in at best 1,600 dollars a month, which is hardly enough to get by.

'Wages are really low. In my specific case, there has been no increase in the fees paid for the services I provide, and as the job market is saturated, you can't ask for a higher fee. My income today is enough to pay my bills, but the net balance is negative,' he said.

According to Fazio, Chile's labour market does not offer well-paid jobs.

Data from the INE puts salary growth in 2011 at 6.3 percent, with 4.4 percent inflation for that same period.

However, 'for low-income sectors, the prices of basic goods and services, such as food and transportation, have risen above inflation, and, therefore, any wage readjustment is unrealistic,' Fazio said.

The last National Socioeconomic Characterisation survey, conducted in November-December 2009, revealed that poverty had grown from 13.7 percent to 15.1 percent of the population, since the previous survey three years earlier, and abject poverty had grown from three to 3.7 percent.

According to Fazio, at the end of 2011 the economy entered a deceleration phase, which is expected to continue in 2012, so that labour prospects are not promising.

He also said that '2012 will probably be a difficult year, as the government budget was decided based on an unrealistic growth figure of about five percent, when the government already knew that growth would be less than four percent.'

While economists discuss the ups and downs of the economy and social movements plan new demonstrations to voice their demands, Acevedo will continue with his job search, now with the added burden of a family split by circumstances that are beyond his control and that, more than frustrated, leave him feeling powerless.

© Inter Press Service (2012) — All Rights ReservedOriginal source: Inter Press Service

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